Playing by the beer rules in PA, distributors win in court

Several years ago, malt beer distributors in Pennsylvania were on the offensive, considering ways to allow the state to let them sell smaller quantities the alcohol, instead of the full case they’re limited to.

“We were for years trying to get permission,” said David Shipula, a distributor and president of a distributor’s association, noting the need for proper safeguards if rules were changed to allow smaller quantities.

However distributors “changed our mode because of grocery stores,” he said. Instead of going on offense by seeking changes in legislation, distributors became “defensive,” noting that the grocery stores had started becoming smaller distributors, in effect competitors, under retail licenses.

Shipula is currently the president of the Malt Beverage Distributors Association for Pennsylvania.

Instead of seeking changes they wanted, the association litigated to keep away encroachment on their niche, granted by their distribution licenses. They argued that existing laws should be kept by all.

On Monday, the state’s Supreme Court upheld a ruling from 2007 which favored Shipula’s Association doing just that.

The court stated that the Pennsylvania Liquor Control Board wrongly gave local store Sheetz, run by Ohio Springs Inc, a license to operate as a retailer when it did not qualify as one.

Sheetz didn’t allow customers to drink the alcohol on the premises of its combination of convenience store with a restaurant on the premises. The court ruled that essentially, the store had illegally become a distributorship.

The intent of lawmakers in creating separate license was to keep retailers and distributors separate, the court said.

For Shipula, from a business aspect, the case was about protecting distributors’ livelihood from competitors not burdened by quantity limits.

The association is pursuing other cases against stores in a similar vein, saying they’re taking advantage of legal loopholes, which have seemingly been made smaller after Monday's ruling.

Looking ahead, however Shipula says that he would like to pursue legislation that would allow licensed distributors to sell in smaller amounts.

“We would very much entertain doing it in a controlled manner,” he said.